San Diego 
The city of San Diego didn't conduct a thorough background check before hiring Hildred Pepper as its director of purchasing and contracting in March 2008, according to an audit released Friday.

The audit did not find any wrongdoing by city officials or by Pepper, but it did question whether city officials did their due diligence before offering Pepper the job.

“The pre-employment background investigation of Mr. Pepper's employment history, education and professional certifications was insufficient for a position with the level of authority afforded the director of purchasing and contracting,” the audit report said.

Specifically, city officials were unaware of several critical audits about contracts at Detroit Public Schools, where Pepper served as contracting chief. They didn't find out about those reports until after he accepted the new job in San Diego.

The San Diego Union-Tribune raised questions about the city's screening of Pepper in a story in May. That story reported Pepper resigned from the Detroit job in August 2007, one day after district officials learned he had asked for approval to pay $1.26 million to a company under investigation by the FBI – even though the company had already been paid.

That FBI investigation involves $46 million in wire transfers that the district's risk-management department made to companies without approval. Pepper's wife, Lydia, was in charge of contract compliance for the risk-management division, according to the district.

According to the audit, San Diego's chief operating officer, Jay Goldstone, was prepared to rescind the offer of employment to Pepper if he had reason to suspect Pepper had been involved in the questionable wire transfers. Goldstone approved the hire after asking Pepper about the issue and hearing from the city's Chief Financial Officer, Mary Lewis, who had looked into the matter.

Hildred Pepper said he played a key role in bringing the wire transfers to light and has cooperated with federal investigators.

The audit, conducted by Sacramento-based Sjoberg Evashenk Consulting for $21,000, didn't find any evidence that Pepper was anything but a witness for investigators.

The audit also says the reason why a thorough background check of Pepper never occurred is because there is a different hiring process for high-level managers that lacks the scrutiny applied to unionized workers. The audit recommends such fixes as verifying the facts on a resume and conducting a criminal background check in other states.

Pepper, for example, lived in Michigan, but the city only checked criminal databases in California.

In San Diego, Pepper supervises a department of about 65 people who handle $865 million in purchases and contracts for San Diego. His annual salary is $143,998.